Final Project: Financial AnalysisTwo of the major competing companies that manufacture drinks are Coca-Cola, and Pepsi. They both produce regular water, flavored water, and soft drinks of many kinds. While this essay will explain what vertical and horizontal analysis is, it will also explain each company’s vertical and horizontal analyses. Also the ratios for each company will be given, and several examples as to how each company can improve in their financial status. The financial analysis of both companies is very important so both businesses can understand how they are being managed.

It is very important for a company to keep up to date financial documents, audits, taxes, and other financial statements. This is the information needed to show what a company is doing with their finances and what they have done in the past. This information is also very useful for management to use and know what to do differently in future months or years. Information like this allows a company to grow, and have healthy production going forward. Having this data also helps management, investors, and creditors know if there are any issues that have come up in the past that need to be worked on.

While in competition, these two companies have continued to grow in size, market value, and profit sales. Since the beginning of their competition, both companies have ventured into new areas of sales, (such as snack foods, iced tea, and bottled water) and they continue to think of new ways to grow their business yearly. In order for both companies to continue to grow in the ways they foresee, they must have investors to invest money in the company. These current and potential investors will first look at both company’s financial statements and data, find as much information as possible needed to make a decision, then make a judgment call as to which company is the best investment at the time.

By competing for the number one position of drink provider, both companies have continued to grow and prosper by creating new beverages throughout the years. Since they both have the advantage of being known on a global scale, they have been rated number one and two for many years. They have modeled practices that one another have followed in order that they could overcome any obstacles to worldwide manufacture and distributions. (The Coca Cola Company, 2009). Although they are two different companies, they produce somewhat similar products, and their distribution techniques and services are very similar also. Both companies continue to use the “follow up strategy”, which was used to explain that when one of the companies launched a new product the other would very quickly come up with a similar product or service. Using this method one could see why these two companies easily pass all other companies in the competition.

Even though both these companies are both growing rapidly and gaining huge profits yearly, they have also had to deal with global issues, politics, and precedents. They both have taken risks getting into business with markets where they didn’t necessarily belong and where the risk was far too great. So they had to back out of some markets because of several issues that arose from those ventures. They had to find who their target audience was and begin to produce products that were specifically made for that group of people. By making it appear as if they are following the highest moral and ethical practices, they create a product that is focused towards a specific population. Then, even though other companies cannot compete at the level that Pepsi and Coke can, they also try to use the same target influences in global markets.

There are three tools of the financial statement analysis: Vertical, Horizontal, and Ratio Analysis. Each tool has a different function, but each helps to analyze important information and data that is in a financial...

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